Is silver worth US$28.50 an ounce?

One analyst remarked that silver is now 'only marginally undervalued as compared with gold', with the gold-silver ratio now down to a 3.5-year low.

What is the price of silver futures?

Silver rallied for a second straight day on Tuesday 18 August 2020, following a volatile week that saw prices plunge as much as 20%.

Silver is up 9% so far this week, with investors rushing to accumulate physical assets in the face of a falling US dollar.

As at 14:40 GMT on Tuesday, silver’s September 2020 contracts are trading at US$28.44 per ounce on the IG platform.

IG’s market analysis shows that ‘buys’ form 51% of all trades on the counter today, with ‘sells’ comprising 51% of all trades across the week so far.

Why is the price of silver rising?

Silver prices are on the rise again this week because of US dollar weakness, according to Daily FX strategist Margaret Yang.

The US Dollar Index has been steadily dropping since last Friday (14 August 2020), touching 92.50 on Tuesday – its lowest level since May 2018.

Commerzbank analyst Carsten Fritsch says silver’s latest rally is also likely due to ‘robust’ ETF inflows in recent days.

‘ETF investors apparently viewed the significantly lower silver price in the interim as a buying opportunity,’ he noted.

The greenback’s present bearishness – caused by market uncertainty amid a lack of economic direction – has also sent gold prices up 4% at the start of this week. Gold is currently trading above US$2,000 an ounce.

Ready to take a position on silver? Start today by opening a live or demo IG trading account.

Silver’s current bullishness is a stark contrast from the previous week, when prices had experienced a series of sharp increases and declines all within a span of four days.

As Fritsch previously stated, profit-taking by investors had been the main catalyst of silver’s massive price rout last Wednesday to under US$24 an ounce.

What is the silver price forecast?

Investors are now looking towards Wednesday’s US Federal Reserve meeting minutes, an upcoming review of US and China’s phase one trade deal, as well as central bank policy guidance and geopolitical prospects, says Yang.

Against this backdrop of ultra-loose monetary policy, geopolitical and pandemic risks, and a low interest rate environment, she posits that the mid to long term price outlook of precious metals remains bullish.

Meanwhile, Fritsch remarked that silver is now only 'marginally undervalued as compared with gold', with the gold-silver ratio down to 73 (from an all-time peak of 115 recorded in April this year). This is the lowest point since April 2017.

On the flipside, CPM Group's managing partner Jeffrey Christian predicts that silver prices will taper off in the last quarter of the year.

Christian previously told investment sites that he foresees prices ‘plateauing’ between September and November as industrial demand for silver has been recovering slower than production. This has resulted in 'some bearishness hanging over the physical silver market', he said.

In the immediate future, however, Yang notes that the overall technical trend for silver is still looking bullish as the 20-, 50- and 200-Day Simple Moving Average (SMA) lines are ‘nicely trending up’.

Live IG client data also indicate a general expectation for silver prices to keep rising in the near term, with 86% of all opened accounts holding ‘buy’ (long) positions on the commodity.

How to trade commodities with IG in five simple steps

Are you feeling bullish or bearish on silver? Either way you can buy (long) or sell (short) the asset using derivatives like CFDs offered on IG's industry-leading trading platform in a few easy steps:

  1. Create a live or demo IG Trading Account, or log in to your existing account
  2. Enter <Silver> in the search bar and select the instrument
  3. Choose your position size
  4. Click on ‘buy’ or ‘sell’ in the deal ticket
  5. Confirm the trade

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Global recession 2020

Discover everything you need to know about the possibility of a recession this year.

  • Get expert analysis on how the risk of recession is impacting financial markets
  • Access tools and guides to help you make the most of opportunity
  • Find out what to trade, invest in and hedge during a recession

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.